Billing and coding
What to know about place-of-service codes for behavioral health
Learn what place-of-service codes are, why they matter in medical billing, and how to use them correctly — especially for telehealth and outpatient care.
Billing for therapy requires detailed knowledge of various codes, and getting the specifics right when billing can make or break a therapy practice. Beyond the usual CPT codes, another important detail to understand is the place-of-service (POS) code.
What are place-of-service (POS) codes?
Place-of-service codes are two-digit numbers used on healthcare claims to indicate the location where services were provided. When a therapist or administrator submits a claim to an insurance provider, each session must also include a POS code. These numbers let the insurance company know where the client is located during their session. There are a wide variety of POS codes available, depending on the setting. Aligning your services with the correct POS codes is important for billing.
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Why place-of-service codes matter
POS codes may seem like a minor detail, but they have a significant role to play in effective billing. They impact things such as reimbursement rates, claim approvals, compliance with insurance policies, fraud prevention, accurate documentation, and strengthening your revenue cycle.
- Reimbursement rates: Different insurance companies often have different reimbursement rates depending on the service location. For example, a hospital setting may be reimbursed at a different rate than a private office, or a virtual session. It's important to check with your insurance panels to determine the rates for each place of service.
- Insurer compliance and claim approval: Correct codes lead to faster claim approvals. Following the insurance company’s billing guidelines makes the process much smoother. Incorrect codes can lead to denials, requests for more information, and significantly slow down the process. But when insurers see that your practice and your POS codes are aligned, they can proceed with approving a claim.
- Fraud prevention: Claims that include dates and POS codes give very specific clarity as to when and where the services took place. This helps reduce the risk of fraud and abuse.
- Effective documentation: Tracking the service location is important for your own records and documentation. Not only is it useful for billing, but in the event of an audit or records request, you have clear documentation that can protect you and your practice.
- Strong revenue cycle: Timely, accurate claim submissions lead to faster approvals, which leads to faster payment. POS codes are an important part of accurate claims that keeps your revenue cycle moving efficiently.
Commonly used place-of-service codes
Here are some of the most commonly used POS codes in outpatient and mental health settings:
- 03: School: The session occurs in a school setting. This includes clinics or health facilities that reside within an educational institution.
- 02: Telehealth (synchronous): The session occurs with the therapist and client on an audio/video call at the same time. The client is located somewhere outside of their primary residence.
- 10: Telehealth (in home): The session occurs with the therapist and client on an audio/video call at the same time. The client is located at their primary residence.
- 11: Office: The session occurs in person at the therapist’s office or clinic. This is a very common setting for outpatient therapy and is distinct from a hospital setting.
- 12: Home: The session occurs within the home residence of the client. These in-home therapy sessions don't include assisted living facilities or group homes.
- 21: Inpatient hospital: The session occurs within a hospital facility where the client is admitted for at least one overnight stay.
- 22: Outpatient hospital: The session occurs at a hospital-affiliated outpatient department or clinic. The client isn't formally admitted and doesn't stay overnight.
Key differences: POS 02 vs. POS 10 for virtual sessions
POS codes 02 and 10 both capture a virtual session with a client, but they vary in where the client is located during the session. The 02 code indicates that the client is located somewhere outside of their home, while the 10 code indicates that they are within their home.
- POS 02: Telehealth provided other than in the client’s home: These services are delivered via telehealth to a client when they are not physically located in a private residence. These other settings include school, workplace, hospitals, clinics, community centers, or healthcare facilities. When conducting virtual sessions, it's important to confirm and document the physical location of the client. This is important for billing, safety purposes, and effective documentation.
- POS 10: Telehealth provided in the client’s home: These services are delivered via telehealth to a client when they are physically located within a private residence. Besides a home or apartment, this can also include temporary living arrangements such as a hotel or anywhere considered their current residence. It's still important to confirm the physical location of the client for the virtual session, even if it appears that they're in their home.
If you’re looking for more clarity, Headway also provides further insight into telehealth billing.
How to accurately use POS codes in claims
When completing paper and electronic claims, it's important to know where to input the POS codes. Placing these codes in the correct sections of the claims helps to ensure accuracy and faster processing. Common formats to be aware of are the CMS-1500 and the 837P.
The CMS-1500 is a common paper and electronic form that can be filed on paper or submitted electronically. Box 24B is where the POS codes should be placed. Each service and session has its own line, so the POS code will need to be listed for each session.
The 837P is another common format used for electronic claims. It utilizes the data from the CMS-1500 and files it electronically. When using this format, you'll input the POS code in two places. The Facility Code Value field (Loop 2300, Segment CLM05-1) indicates the general place of service for the entire claim. The Place of Service Code (Loop 2400, Segment SV105) is used for each individual service line. This allows for different POS codes on different lines within the same claim. These are the primary and required locations for the claim.
Tips for staying compliant with POS coding
The following are best practices for compliance with POS coding:
- Ensure that you and your staff know what codes are commonly used in your practice.
- Verify and double-check the POS codes on every claim to ensure they're correct.
- Maintain thorough documentation and make sure it matches the claims you file, especially in the case that an insurance audit occurs.
- Stay up to date on regulatory requirements as well as insurance requirements.
- If applicable, make sure your billing and administrative team has ongoing training that keeps them up to speed on the latest requirements.
- Audit and review claims periodically to check for accuracy and compliance.
- Consult when there are ambiguous POS situations.
- Use billing technology or services that prompt for POS codes and flag inconsistencies.
- Familiarize yourself with the most up-to-date list of POS codes.
Where to find an official list of POS codes
The Centers for Medicare and Medicaid Services (CMS) manages the official list of POS codes. This list comprises all officially recognized service location codes. It shows three columns: the two-digit code, the place of service name, and a description, which explains each code. You can find the official CMS Place of Service Code Set here. Reference this code set if you or your billing team is unsure which code to apply on a claim, and keep an updated version of this list nearby for easy access.
Build your best practice with Headway
Navigating place-of-service (POS) codes is essential for accurate billing and compliance in behavioral health, but the administrative complexity can be overwhelming for providers. Headway simplifies every step of your workflow, from submitting claims to managing documentation and client scheduling — all in one secure platform. With built-in EHR features, automated insurance billing, and compliance tools, Headway helps you avoid costly errors and stay up to date with evolving coding requirements. By streamlining these processes, Headway enables you to focus more on client care and less on paperwork.
This content is for general informational and educational purposes only and does not constitute clinical, legal, financial, or professional advice. All decisions should be made at the discretion of the individual or organization, in consultation with qualified clinical, legal, or other appropriate professionals.
© 2025 Therapymatch, Inc. dba Headway. All rights reserved. No part of this publication may be reproduced without permission.
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